There have been a number of changes to superannuation which make additional contributions to your retirement savings easier, albeit with defined caps in place. Making top-up contributions during the year or at the end of the financial year could be prudent, and these can also provide a valuable tax off-set.
Salary sacrificing into super, known as ‘concessional contributions’, is a good retirement savings strategy. The super contributions only attract the 15% contributions tax, and it also has the added advantage of lowering your income as it comes out of pre-tax dollars.
EOFY personal contributions – super ‘catch up’ provisions
Recent changes to superannuation laws now allow everyone to make after-tax lump sum ‘concessional contributions, should cash-flow allow, up to a cap of $25,000. From 1 July 2019, those with less than $500,000 in super can begin to carry over concessional contributions for unused amounts to a limit of $25,000 each year over a total period of five years. This means over a period of five years you can put aside extra money as it comes to hand using the remainder of any caps from previous years. This is particularly important for many business owners (and women) who often neglect to look after their own financial wellbeing in this regard. If you intend to make any personal after-tax contributions to super this year, please let your dmca adviser know as you need to formally inform your super fund about your intent to do this first and submit that paperwork to the ATO with your tax return.
Government Co-Contribution Scheme
If you don’t make use of concessional contributions, there’s also the Government Super Co-Contribution scheme for low to middle-income earners where the government will contribute money to your super (up to $500) if you put in additional amounts after tax. It’s worth discussing this scheme with your dmca adviser if you earn less than $52,697 for the 2018-19 financial year or $53,564 for the 2019-20 financial year.
Time to review your life insurance cover?
You probably have a level of life insurance cover through your superannuation fund. It’s important to evaluate if this is the right level of cover to suit you and your family. Also, as you age your cover may be automatically reduced, even though you are paying the same amount for your premium. It may be worth checking with your super fund to see exactly what you are covered for. It may be possible to increase the cover, or to find additional coverage outside your super fund depending on your circumstances.
IMPORTANT NOTE: If you do have any insurance cover through superannuation, you may have received a letter requesting you to “opt-in”. If you ignore this request, your insurance cover may cease automatically. We recommend that you contact your adviser if you require assistance with this.
Call us on (08) 82725620 for more details if you’d like to discuss these issues.